Cadence Minerals Accelerates Amapa Iron Ore Production with Azteca Plant Recommissioning
Why we think this is good
The RNS outlines a clear path to near-term revenue generation through the recommissioning of the Azteca Plant, which has a proven track record of producing iron ore concentrate. The low capital expenditure, competitive cost structure, and potential to supplement production with historic tailings are positive factors. However, the company's reliance on off-take financing and the pending mining installation license introduce some uncertainty.
Key Points
- Staged development strategy to accelerate production with low capital intensity
- Azteca Plant recommissioning to produce 380,000 tonnes per annum of 65% Fe concentrate
- Competitive cost structure with estimated FOB cost of $37/dmt and CFR to China of $79/dmt
- Potential to supplement production with historic tailings
- Fully subscribed £402,000 fundraise to support the project
Summary
Cadence Minerals is advancing a staged development strategy for its Amapa Iron Ore Project in Brazil, with the initial focus on recommissioning the Azteca Plant to produce 380,000 tonnes per annum of 65% Fe concentrate. The project has a low capital expenditure of $3.5 million and a competitive cost structure, with an estimated FOB cost of $37/dmt and CFR to China of $79/dmt. The company is in discussions with potential off-takers to fund the Azteca Plant capex and working capital requirements, aiming to minimize dilution to shareholders. The project is expected to commence production within 3 months of securing the mining installation license, and the free cash flow generated will support the detailed engineering for the full 5.5 Mtpa DR-grade (67.5% Fe) operation. Cadence has also raised £402,000 through a share subscription to support the project's development.